The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted as a measure to promote financial stability and protection for consumers through increased regulation of nearly every aspect of the consumer finance industry.

In the years since its enactment, the Dodd-Frank Act has led to significant industry reforms and the promulgation of numerous new laws and regulations. In an effort to stay apprised of these significant industry changes, Burr & Forman's Dodd-Frank Newsletter will serve as a periodic update of recent case law, news, and developments related to the Dodd-Frank Act.

CFPB Involvement in Litigation

 

Alexander v. Ameripro Funding, Inc., No. 15-20710 (5th Cir. Feb. 23, 2016).

The Consumer Financial Protection Bureau ("CFPB") recently filed an amicus brief in the case Alexander v. Ameripro Funding, Inc., No. 15-201710, which is on appeal before the Fifth Circuit. In its brief, the CFPB argues that the district court erroneously dismissed the plaintiffs' complaint where the plaintiffs sufficiently alleged that the defendants violated the Equal Credit Opportunity Act ("ECOA"). Specifically, the CFPB argued that the plaintiffs stated a claim under the ECOA when they alleged that defendants Ameripro Funding, Inc. and Wells Fargo failed to consider public assistance income when they originated plaintiffs' loans.

The Consumer Financial Protection Bureau ("CFPB") recently filed an amicus brief in the case , No. 15-201710, which is on appeal before the Fifth Circuit. In its brief, the CFPB argues that the district court erroneously dismissed the plaintiffs' complaint where the plaintiffs sufficiently alleged that the defendants violated the Equal Credit Opportunity Act ("ECOA"). Specifically, the CFPB argued that the plaintiffs stated a claim under the ECOA when they alleged that defendants Ameripro Funding, Inc. and Wells Fargo failed to consider public assistance income when they originated plaintiffs' loans.

The ECOA provides that "it shall be unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction because all or part of the applicant's income derives from any public assistance program." See Alexander v. Ameripro Funding, Inc., No. H-14-2947, 2015 WL 4545625, at 3 (July 28, 2015) (quoting 15 U.S.C. § 1691(a)). To establish a prima facie case of discrimination, the plaintiffs had to allege that (1) they are members of a protected class; (2) they applied for and were qualified for the loan at issue; (3) they were rejected despite their qualifications; and (4) other similarly-situated persons outside the protected class were given loans, or treated more favorably than plaintiffs. See id. The district court determined that nothing in the applicable case law requires a lender to treat public assistance income the same as other sources of income and noted that, in fact, the ECOA expressly authorizes a lender to consider the fact that income derives from a public assistance program in determining creditworthiness. The district court found that plaintiffs failed to allege that they qualified for yet were denied a mortgage loan and that other similarly-situated applicants received the same or a comparable mortgage loan. The court further determined that plaintiffs' complaint contained conclusory allegations of direct evidence of discrimination and, as a result, were required to establish a prima facie case of discrimination.

 

To read the Dodd-Frank Wall Street Reform and Consumer Protection Act Update, please see the full April 2016 newsletter.